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24 Jan 2020

What will 2020 bring for the R&D world?

Positive noises from HM Government signal that the future of R&D Tax Relief is strong and is an area of growth that should not be missed

Sadly we do not have a crystal ball with which to predict the future but as members of the HMRC R&D Consultative Committee we are able to report on the direction of travel for the R&D tax relief system. The good news is that the government believes that R&D is vital to a productive economy – stating that firms which invest in R&D have around 13% higher productivity than those firms that do not invest.

With this in mind, the government announced some positive intentions in the Queen’s speech before Christmas with further information expected in the budget on the 11th of March.

Proposals include:

An increase in the RDEC tax credit rate to 13% from 12%, the value of the increase is dependent on the rate of Corporation Tax which was discussed at different points on the pre-election campaign trail. Although not a big increase it shows a willingness to invest in R&D and reward those companies that are involved in R&D activities.

A review of what R&D-related costs qualify for tax credits so that important investments in cloud computing and data, which boost productivity and innovation, are also incentivised.

Backing a new approach to funding high-risk, high-payoff research in emerging fields of research and technology.

Reducing bureaucracy in research funding to ensure our brilliant scientists are able to spend as much time as possible creating new ideas.

Prioritising investment in industries of the future where the UK can take a commanding lead – such as life sciences, clean energy, space, design, computing, robotics and artificial intelligence.

These are ambitious aims and each area of government will have pressing demands for investment in the post-Brexit era but our feeling is that these measures support the idea of making the UK an attractive place for quality business investment. The budget in March will hopefully provide more information about the proposals for future changes.

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